Overview of DMAS Budget Provisions: Introduced Budget Presentation to the Subcommittee on Health and Human Resources Senate Finance Committee Patrick Finnerty, Director January 12, 2009 Department of Medical Assistance Services
Total DMAS Funding - Introduced Budget Total Funds in Millions FY2009 FY2010 Base Appropriation $5,841.80 $6,165.20 Proposed Funding Items $276.5 $274.9 Proposed Reductions ($269.8) ($140.7) Total Proposed Budget $5,848.50 $6,299.60 *Totals may not sum due to rounding. 2
Total DMAS Funding - Introduced Budget Total Funds in Millions FY2009 FY2010 Base Appropriation $5,841.80 $6,165.20 Proposed Funding Items $276.5 $274.9 Proposed Reductions ($269.8) ($140.7) Total Proposed Budget $5,848.50 $6,299.60 *Totals may not sum due to rounding. 3
Medicaid Enrollment Trends 450,000 400,000 Non-Disabled 350,000 Adults & Children Area enlarged 300,000 next slide 250,000 200,000 Aged, Blind 150,000 & Disabled 100,000 50,000 - FY1992 FY1993 FY1994 FY1995 FY1996 FY1997 FY1998 FY1999 FY2000 FY2001 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 4
Medicaid Enrollment Trends 300,000 475,000 290,000 Non-Disabled 280,000 450,000 Adults & Children 270,000 260,000 425,000 250,000 240,000 400,000 230,000 220,000 375,000 Aged, Blind 210,000 & Disabled 200,000 350,000 Jul-07 Nov-07 Jun-08 Jul-08 Nov-08 Aug-07 Jan-08 May-08 Aug-08 Jan-09 Sep-07 Oct-07 Dec-07 Feb-08 Mar-08 Apr-08 Sep-08 Oct-08 Dec-08 5
Medicaid Enrollment Projections 600,000 500,000 Non-Disabled Adults & Children 400,000 300,000 200,000 Aged, Blind & Disabled 100,000 - 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 -2% -3% -7% -5% -3% -4% 4% 8% 13% 10% 5% -2% 2% 6% 6% 4% Adults & Children 6% 4% -1% 0.4% 1% -0.1% 1% 2% 3% 3% 4% 2% 2% 2% 2% 1% Aged, Blind & Disabled 6
Medicaid Enrollment Projections 600,000 2008 Forecast 500,000 Non-Disabled Adults & Children * 2007 Forecast 400,000 300,000 2008 Forecast 200,000 Aged, Blind * 2007 Forecast & Disabled 100,000 - 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 7
Medicaid Enrollment Trends Total Medicaid enrollment grew 9.1% in FY 2004, 7.6% in FY � 2005 and 4.9% in FY 2006. Enrollment decreased in FY 2007 by 0.4% and increased in FY 2008 by 2%. The decrease in FY 2007 is believed to be a direct result of � implementation of the new federal citizenship and identity requirements on July 1, 2006. The consensus forecast projects total enrollment growth of � 5.1% in FY 2009, 4.6% in FY 2010 and 3.4% in FY 2011. 8
Forecast Drivers � The current Medicaid expenditure forecast for FY 2009 and FY 2010 reflects: • Higher enrollment growth • Relatively modest growth in utilization • Little growth in unit cost because inflation adjustments have been excluded • Continued significant growth in community mental health service expenditures and community long- term care waiver service expenditures 9
Proposed Funding Items � Medicaid Expenditure Forecast: Adjustment in DMAS’ appropriation Funds in Millions for the Medicaid program to reflect GF NGF Total the current forecast of expenditures FY2009 $133.8 $129.5 $263.3 for this program. FY2010 $134.6 $115.2 $249.8 � FAMIS/SCHIP Expenditure Forecast: Adjustment in DMAS’ appropriation for Funds in Millions the Family Access to Medical Insurance GF NGF Total Security Plan (FAMIS) and SCHIP FY2009 $4.3 $8.0 $12.3 Medicaid Expansion to reflect the current forecast for these programs. FY2010 $7.3 $13.7 $21.0 10
Proposed Funding Items � Increase Consumer-Directed Personal Care Rates: Funds a three percent rate increase Funds in Millions for providers of consumer-directed GF NGF Total personal care, respite care, and companion care in the EDCD, MR/ID, FY2009 $0 $0 $0 DD, and HIV/AIDS home and FY2010 $1.7 $1.7 $3.4 community based long-term care waivers. 11
Total DMAS Funding - Introduced Budget Total Funds in Millions FY2009 FY2010 Base Appropriation $5,841.80 $6,165.20 Proposed Funding Items $276.5 $274.9 Proposed Reductions ($269.8) ($140.7) Total Proposed Budget $5,848.50 $6,299.60 *Totals may not sum due to rounding. 12
Proposed Budget Reductions � October 2008 Budget Reduction Plan: Adjustment in DMAS’ appropriation to Funds in Millions reflect the reductions announced by GF NGF Total Governor Kaine in October 2008 for FY 2009. For DMAS, the reductions FY2009 ($7.5) ($6.5) $0 included the following: FY2010 ($8.4) ($7.6) $0 – Suspend the Indigent Health Care Trust Fund – Capture higher than expected rebates on physician-administered drugs & institutional drugs – Eliminate optional secondary Mental Illness/Mental Retardation screening for waiver recipients – Enhance pharmacy management initiatives – Implement provider claim check edits – Redesign FAMIS program outreach activities – Reduce discretionary administrative expenditures � 46 positions eliminated 13
Proposed Budget Reductions � Provider Payment Schedules: Generates one-time savings in FY 2009 Funds in Millions GF NGF Total – Change the monthly payment FY2009 ($126.5) ($126.5) ($253.0) schedule for Managed Care Organizations beginning in June FY2010 $0 $0 $0 2009 to lag three to four weeks – Change the payment schedule for the fourth quarter hospital DSH and medical education payments to the first quarter the following year – Change the payment schedule for fee-for-service provider claims from a one week billing lag to a two-week billing lag – Delay payment of the June 2009 Medicare Part and B Premium to the federal government into July 2009. The federal government allows a 20-day interest-free grace period for payment. The Medicare Part D premiums are already paid in July. 14
Proposed Budget Reductions � Provider Reimbursement Rates: Funds in Millions – Modify reimbursement methodology GF NGF Total for long-stay hospitals FY2009 $0 $0 $0 – Reduce congregate residential services rate increase FY2010 ($24.4) ($23.7) ($48.1) – Reduce hospital capital reimbursement from 80% of allowable costs to 75%; reduce percentage of allowable costs hospitals are paid for inpatient services from 78% to 75% for acute and rehabilitation facilities and from 84% to 81% for inpatient psychiatric – Reduce rates paid for freestanding psychiatric facilities by rebasing and settling their reimbursement to 100% of allowable costs The Introduced Budget excludes FY 2010 annual inflation for facility-based providers, i.e., hospitals, nursing facilities, home health and rehabilitation agencies, psychiatric residential treatment facilities and limits MCOs to a 7% rate increase funded last year in the 2008 Appropriation Act The value of these reductions is not shown in the table above but rather reflected in the Medicaid expenditure forecast 15
Proposed Budget Reductions � Community Long-Term Care Programs: Funds in Millions – Place a cap on the EDCD Waiver GF NGF Total beginning July 1, 2009 at 15,250 slots FY2009 ($1.3) ($1.3) ($2.6) – Delay implementation of 200 mental retardation waiver slots that were FY2010 ($23.5) ($23.5) ($47.0) scheduled to be released April 1, 2009 – Establish a maximum per person annual expenditure cap for home and community- based long-term care waiver recipients equal to the average institutional placement cost. – Remove two newly added services, environmental modifications and assistive technology, from the EDCD and HIV/AIDS waivers. These services will still be available for individuals entering these waivers through the Money Follows the Person demonstration program. 16
Proposed Budget Reductions � Other – Eliminate funding for the State/Local Hospitalization Program ($10.9 million GF) – Close Southeastern Virginia Training Center ($8 million GF) – Increase prior authorization of community mental health services ($0.9 million GF): adds prior authorization requirements for five additional services; similar requirements were implemented for the two largest mental health services at the beginning of this fiscal year – Limit special Indirect Medical Education payments to Virginia hospitals ($97,530 GF): Eliminates a special payment for high Medicaid Neonatal Intensive Care Units provided to an out-of-state hospital – Retain portion of school revenue maximization for DMAS administrative costs ($0.5 million GF): Allows DMAS to retain five percent of the federal funding the agency currently passes on to local school divisions to reimburse for the expenditures associated with the special education services for Medicaid eligible children. 17
Increased Revenues � Tobacco Taxes: Funds in Millions – Increase tobacco taxes from $0.30 to $0.60 per pack. The revenue will be GF NGF Total deposited into the Health Care Fund FY2009 $0 $0 $0 which is used as match for federal Medicaid funds FY2010 ($154.9) $154.9 $0 � ICF/MR Provider Assessment: Funds in Millions – Implement a provider assessment on Intermediate Care Facilities for the GF NGF Total Mentally Retarded (ICFs/MR); this will FY2009 $0 $0 $0 have little or no net effect on FY2010 ($7.1) $7.0 $0 providers 18
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